The Daily View: The taxing problems of the ETS
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IN A perfect world, the EU would ditch the Emissions Trading System for shipping. It wasn’t designed for ships or shipping companies, and the money it raises will mostly end up in the coffers of European governments instead of helping reduce pollution at sea.
Taxing emissions is good. But multiple taxes on the same emissions without providing a clear alternative fuel will only waste time, money, and probably fuel.
Is the ETS doing that?
Mediterranean port sources argue the ETS is driving ships to skip EU ports for alternative transhipment stops just outside Brussels’ reach, we report.
The administrative burden of the ETS and its scary big brother, FuelEU Maritime, is still a common gripe, especially for smaller companies. Grumbles from Africa and Asia about an extra-judicial tax grab by Europe will probably increase in the next few years, and with good reason.
The price of a carbon credit is about €70 ($81.80) and shipping companies are too small to influence it, so it fails on emissions grounds too.
Eurocrats are well aware that the International Maritime Organization has almost achieved a global carbon pricing scheme, however complex and frustrating. The environmental and political justifications for keeping its own rules in place are therefore flimsy.
Maybe the hassle of chasing down tiny operators who skip their ETS fines will mean the sums raised (billions of euros, albeit billions split between 27 countries) are not worth the fuss. Ships are much better at moving abroad than cement factories, and better still at finding new names, registered owners and paperwork, after all.
But expecting politicians to forgo their new rivers of gold is politically naive. The next battle is therefore how to live with the EU rules, and to get as much support for decarbonisation from them as possible.
Full harmonisation of the EU’s framework with the IMO’s should happen, and maybe it can.
The only certainty for now is more paperwork.
Declan Bush
Senior reporter, Lloyd’s List
